Arguing that the marketing team’s inability to secure any retail tenants for the property “is a product of the changing retail economy over the last decade,” rather than an issue of programming, pricing or potentially higher returns, Cypress Equities, which acquired the foreclosed upon site in 2012, is now seeking approval to convert 47,522 square feet of the five-story building’s retail space into open floor plan office space across the center’s third and fourth floors.

And while the Planning Commission hearing for the proposed conversion has now been slated for March 15, keep in mind that the development team’s plea doesn’t outline a strategy for (or commitment to) leasing the 217,000 square feet of remainder retail space.

Comments from “Plugged-In” Readers

Hard to believe this got built without commitments from retail tenants. I thought I remembered that Nordstrom Rack and Off Fifth had signed to go in here before it got built, but both ended up elsewhere. I remember the concept as being sort of upscale outlet stores. Guess that didn’t pan out…

Office space on the upper floors probably makes sense, but would that fall under the cap on new office space development?

The proposal is for office space of under 50,000 square feet, so it would take from the small space allocation, of which there is currently over 1 million square feet of allocation space available, so that is not an issue.

“Plea” by the developer? Kind of a dramatic description. As to noting it does not include a promise to lease the remaining space as retail, that answers my first thought at seeing this. What will prevent the developer from coming back in 2 years and asking to convert another 47,552 feet of space? And on and on?

The developer is caught between a rock and a hard place, but when this project was first announced many felt there was no need for additional retail space on mid-Market. The empty storefronts were everywhere to be seen. The developer did not do their due diligence.

It sounds as if the remaining space could sit empty indefinitely. Given that, my solution would be for Planning to allow this request but stipulate any future request to convert additional space to office use must be allocated from the 850K yearly cap. No transforming this building to complete office use by incremental use of the under 50K cap which has surplus space remaining unlike the 850K cap which is max’d out. Nice compromise. Better yet, convert the empty space to residential use but that may be problematic. There may be structural reasons why it can’t be residential.

I doubt it could be easily converted to residential. I haven’t seen the plans, but you’d likely have to rerun tons of plumbing to have enough restrooms, as well as have a ton of wasted space inside due to the requirement that all residences have access to natural light. Floor plates for retail are quite a bit different from floor plates of residential. At least with offices, I’d bet all you have to do is throw up lots of drywall everywhere.

There are plenty of larger scale and volume-based retailers that still gobble up space like they did a decade ago. The biggest difference is that, in a city like SF, there’s an incredible cost associated with permitting, build outs, etc. namely for smaller upstart boutiques (which are arguably the fabric of SF-ness).

I’d love to see the Foodhall or something like it occupy at least part of the first floor. Or even better, a large-scale “open-air” goods market a la the Ferry Building, Chelsea Market; where small boutiques can get booths or bays and have it anchored by food, grocery, gallieries, and some training/classes (similar to what 18 Reasons does with dinner parties, events and classes for the community). It’s a bit of a lofty vision to command, but I think making 6×6 a microcosm of San Francisco and it’s parts would be a winning direction to take. And if it requires renting out the top 2/3 of the building to office, who cares.

I just don’t understand how the developer thought that retail was a good idea, even in 2012. FFS the giant Westfield mall is one block away, and there is literally tons of retail within a 10 minute walk. You have everything from upscale union square boutiques to grungier mid market st store fronts.

Maybe back in 2012 they thought that another nice mall-like building will just get absorbed? This is a great example of prime class A space in a desirable city losing money for investors. I dunno, but unless these cats can get a huge WeWork in there or something, somebody’s gonna be loosing some dinero here big time (and I’m glad it aint me.)

Agree as to the investment group and for sure they have to be getting nervous after a year and no leases signed. It’s not a situation like that of residential and office developers who can afford loss leader ground floor Class A retail that sits empty indefinitely (as we see so much of in the city) as long as the residential or office component gets leased out. This building is not flowing period. Inexplicable miss.

There are thousands of new homes and hotel rooms opening within a few blocks of here over the next five years. It’s taken much longer to bring the housing than expected, but now that it’s finally happening, this spot will make a lot of sense for retail. 6×6 just opened at an awkward time, late enough to be hurt by the Amazon effect and too early to be helped by Mid-Market’s revitalization. I expect they’ll find something good for the other floors, and if not, having offices here isn’t the worst thing in the world.

When they originally pitched it, they indicated they were near a deal for Target to occupy a large part of it. I know because I was at the hearing supporting it on that basis. But it was delayed beyond the tolerance of Target which went to the Metreon as we all know. Also, the original concept was for lower end mass market shopping that could serve the adjacent Tenderloin and SOMA residents with basic necessities including some groceries. I suspect the new owners were asking higher rents than that kind of business could support and it’s too far up Market (and into the “edgier” zone) to interest the higher end crowd.

Dave is wrong, as usual, that there’s no need for additional retail in Mid-Market. It’s just that there’s no need for fancy retail and higher end merchandise. There’s still no convenient place for the working class living in the neighborhood to buy food or other essentials and if this place goes office there likely never will be.

There’s tons of low end retail all along mid market now. The idea is to gentrify mid market, not keep it a roving homeless encampment ferevah. This thing needs to be office space, but I doubt they’ll get beyond the 50k sq feet. OTOH maybe that’ll buy them enough time to get decent retail tenants in there.

The homeless do not shop in Target or any other store and the shops along Market are mostly tourist rip-offs. What’s needed is genuine “value” retail for people working at minumum or near-minimum wages. I would say something like Walmart but I know that’ll never happen but there are other national and regional discounters who sell basic clothing items, toiletries and some groceries at rock bottom prices.

Like it or not, San Francisco long ago decreed that the Tenderloin neighborhoods near this location were going to be the site of a lot of subsidized and BMR housing and the people living therein, who are not homeless and typically work, need a place to buy necessities. That was what this building was supposed to be.
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The market dictates highest and best use, which in this case, would be office space. There are new housing units within walking distance in this area so once you have achieved a critical mass of workers and pedestrians, some retail will open up. SF does not have the population size and strength of a NYC, Hong Kong, Singapore, or Tokyo to support full street retail.

this project was a white elephant and doomed to fail before it got entitled.

The decline of big footprint retail is not something that just started in the last two years. The notion that anyone should be building a multi-story retail mall in the 2000s or 2010s was laughable to begin with. Yet blind investors keep plunging ahead.

The biggest white elephant yet to come has not even broken ground — the huge mall at Candlestick. No transit access, a far corner of the city/region. Doomed to fail in very short order. Yet the developers keep pushing ahead. If they actually build and tenant it there will be a brief surge of interest and curiosity when it opens that will fade very fast and will go on life support within a couple years. You heard it here first.

Couldn’t agree more. I live in Little Hollywood, just across 101 from Candlestick, and my neighbors and I would ALL love to see that mall turned into more housing, or housing/offices with neighborhood-serving retail, ANYTHING but an outlet mall.

Isn’t Baylands supposed to have a large retail component? Sadly, it will have little housing. The Baylands development will have direct 101 and CalTrain access so a large retail component makes more sense there – not that it really makes sense in today’s retail environment. Still, Baylands will be far, far larger than HP/CP in terms of office space and workers so doing a regional retail hub (if it has to be done) makes more sense there. ITA – instead of an HP/CP mall put more housing on that site. Keep the retail component at HP/CP as neighborhood serving shops and such.

“Big footprint retail” isn’t dead. Let a Walmart open on Market Street and I bet it would be mobbed–like CostCo.

If San Francisco retail is in trouble, it’s because it all serves the high end crowd which is only part of the population. There are a lot of people living in San Francisco because they have rent-controlled apartments, subsidized apartments or inherited homes (or homes bought decades ago) and these people do not have the incomes to shop at Whole Foods, Market on Market or the Hayes Valley boutiques.

Given retail that sold decent quality at an affordable price, they would come.

Not sure I agree with you guys. The the entire southeast region, and southwards for several miles as well, has no retail. I could see lotsa people that live up/down the 101 corridor shop there. It’ll be a destination shopping area, not just a lame mall. It’s SF after all, and’ll have nice cafes, restaurants, pretty bay views, walking trails, events, etc. F’course the execution of it could be ruined, but if they do it right, I think it has a good chance of succeeding. That whole part of the city is being radically transformed. We started with housing, soon will add retail and later office/tech/bio. It’s all about the live, work, play, shop…24/7 😉

Yes and no. Big box is the primary retail option in the suburbs. Some big box in urban areas are doing OK too, but a shocking number are failing. But malls are on the decline, as a very high percentage of the traditional anchors have gone kaput or are radically scaling back their store count.

There are malls all over the region and state that are withering and their owners are looking to add housing and convert some or all of the malls to other uses. The number of malls in the country is shrinking and almost all of those shuttered malls are in suburban locations. As well, a huge number of major retailers are shutting stores and shrinking footprint all over the country. In fact, typically those retailers are keeping their strongest locations which typically includes their most urban outlets.

Right here in SF we only have to look at Macys as an example. They are closing their Stonestown (auto-oriented, traditional suburban mall-style) location but keeping their Union Square (transit/walkable center city) location, though even the latter is being downsized with the closure of the men’s store.

The owners of the Northgate mall in San Rafael are floating ideas of adding housing and completely redeveloping the whole property because the mall is on a downward spiral, with the loss of key anchors and changes in tastes and shopping patterns.

I should clarify that by “big box” I meant standalone places like Target, Bass Pro, Total Wine, Walmart, Home Depot, Staples, etc. I agree that shopping mall department stores anchors are on the decline and dragging the malls with them. This presents a golden opportunity to redevelop those sites as denser residential over retail configurations. They’ve already got the streets access and fewer NIMBYs to protest the density.

Back in 2009, the prospective tenants mentioned are “Toys R Us [bankrupted], outlets like Off 5th and perhaps a Target [No], Sears [closing stores], Fry’s Electronics and Sports Basement, or outlet stores like Nordstrom Rack”.

Who knows if that is a factor. The recent NBC Bay Area expose of SF’s major street problems was surprising in only so far as why did it take so long for it to be covered so boldly in the media? Perhaps the tourism/retail industry pushed it?

I cannot forgive City Planning for approving this obviously unneeded commercial elephant when they always put up so many obstacles to housing development, especially market rate housing development. Given the fact that the building is up, I agree that a food court is a good idea for the ground floor. Let them convert the upper floors to desperately needed housing if possible.

Another food court will suck away desperately needed retail life from the street; there are already very large food courts at the tourist malls (Bloomingdales/Nordstrom/Metreon) which diminish the challenging neighborhood.

If the building can’t become offices, I’d like to see demolished or converted into housing/hospitality mixed use.

This is one of those situations where instinctively you knew it wasn’t going to work. San Francisco is saturated with all the retail it can sustain. It’s a small city with store front vacancies in almost all newer construction. For selfish reasons I’m glad it was built to help advance the area but it should have been much taller and housing.

Well, it is not just about the city itself. It is about the whole Bay Area and all tourists. There are close to 8 million people living in the Bay Area plus the tourists. It can and should attract people to the retails and such.

It’d be nice to have a real supermarket in the basement there, because I miss the meat counter at Bristol Farms. (Trader Joe’s meat department is… unreliable.) But what I’d really like is to see this building open for business. ANY business. If that means offices, so be it.